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62% of treasurers think blockchain and Fintech will change the face of treasury. But how?
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Blockchain and Fintech to transform treasury

Feb 24th 2017 |

It was only two or three years ago that technology and cyber-security could barely make it into treasurers’ top 10 priorities. Cyber-security is now top and the revolutions in payments, treasury technology and Fintech dominate treasury tactics and strategy. How corporates and their partners deal with digitalisation will determine whether or not they survive the next decade and treasurers – and their boards – realise it.

One key technology that has moved from the margins, through hype into the mainstream is the blockchain. Once thought of solely in terms of crypto-currencies the distributed ledger is now seen as the future of everything from payments systems, contracts and trade finance to airline ticketing systems. So do treasurers think the blockchain will affect them?

EuroFinance, in conjunction with JP Morgan, asked just under 250 treasurers at global MNCs whether they believe that the blockchain will fundamentally change the payments ecosystem. Of those asked, 62.4% said yes. “I am very interested in blockchain. We are not using it yet but it is coming. I am interested in that you can get all the data of your payments in real time and It is secure; it means collaboration between banks and corps to make corporates life easier,” explains one treasurer. And when will we begin to see concrete products? “In the next three to five years we will see something we can use, a tool for corporates.”

And it’s not just payments. One treasurer believes, “Blockchain will have an immediate impact on reconciliation. We know the banks are really active in this area and that they offering more services in intelligent reconciliation.”

And one retailer sees the blockchain as an enabler for innovative loyalty schemes based on pseudo-currencies and blockchain wallets.

When it comes to Fintech, treasury is already some way up the learning curve. Asked, “are you using any payment services provided by financial technology companies?”, 36.3% said yes. And of the 63.7% who said no, 64.8% said that they would consider doing so in the future.

These responses suggest that treasurers are adopting the simpler and more mature SaaS and Cloud offerings, and waiting to see which companies emerge from the swarm of new start-ups with a resilient and scaleable technology and business model before committing. In the words of one of the more cautious treasuries: “I don't dismiss anything but we don't know who those companies are and we are not going to be the first ones to use them.”

Those companies that have taken the plunge in payments are implementing solutions such as C2FO a dynamic receivables discounting solution and are hoping to use new solutions to eliminate bank payments portals. They are also being forced to look at Fintech solutions in geographies from which their core banks have withdrawn.

Other treasurers interviewed by EuroFinance have confirmed that they are actively investigating Fintech solutions but that “the issue is how these would work for us”. One treasurer believes, “There is a real revolution in that area. In the next three years it will change the way we do KYC documentation, trade finance and anything where we have to move money. Where there is a lot of paper work there is a lot of efficiency to be gained.”

But there are cautionary tales too. One treasurer admits: “We have had really bad experiences with being the first mover. It is difficult; the risk of failure is high. Now we will wait and see.”

As well as a legitimate fear of the bleeding edge, treasurers may have another, less obvious reason for waiting. Asked, “Are you satisfied with the data that you are able to get from your current payment processes?” Just 67.2% answered yes. This response might be proof that these treasurers have put in place the vast majority of the best practice solutions recommended in modern payments. On the other hand, it may reveal a dangerous level of complacency and unsolved inefficiency. Time will tell.

Payments survey results

Do you believe blockchain technology will fundamentally change the payments ecosystem?

Yes

62.4%

No

37.6%

Are you using any payment services provided by financial technology?

Yes

36.3%

No

63.7%

If those that said "No" to this question, 64.8% said "Yes", they would consider using payment services provided by a financial technology company in the future?

Are you satisfied with the data that you are able to get from your current payment processes?

Yes

62.7%

No

32.8%

How important is pricing, data presentation and reporting detail when selecting a payment provider (bank or non-bank)?